Edited version of private advice

Authorisation Number: 1051611814820

Date of advice: 21 November 2019

Ruling

Subject: Capital gains tax (CGT)

Question 1

Were the ownership interests held by each Parties A, B, C and D in Properties 1 and 2 acquired on a date before 19 September 1985?

Answer

Yes. The Commissioner considers that the properties have passed under the Will and been received on the date of passing as per section 128-15 of the ITAA 1997. More information about capital gains tax and deceased estates can be found by searching for "QC52245" on ato.gov.au

Question 2

Will the capital gain or loss made by disposal of Parties A, B and D's ownership interests to Party C in Property 1 be disregarded under subsection 104-10(5) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes. The Commissioner considers that the ownership interests in the properties that were acquired pre-CGT in the hands of the owners will mean that the capital gain or loss made on the disposal of that interest is disregarded. More information about pre-CGT assets and capital improvements can be found by searching for "QC52203".

Question 3

Will the capital gain or loss made by disposal of Parties A, B and C's ownership interests to Party D in Property 2 be disregarded under subsection 104-10(5) ITAA 1997?

Answer

Yes. The Commissioner considers that the ownership interests in the properties that were acquired pre-CGT in the hands of the owners will mean that the capital gain or loss made on the disposal of that interest is disregarded. More information about pre-CGT assets and capital improvements can be found by searching for "QC52203".

Question 4

For Property 3 acquired on a date after 19 September 1985, is the first element of Party A's cost base one third of the purchase price paid by Parties A, B and C?

Answer

Yes. The Commissioner considers that it is reasonable for one third of the purchase price to be apportioned to each party that acquired the property. More information about cost base can be found by searching for "QC17161".

Question 5

Are the capital proceeds for Party A's disposal of their one third interests in Property 3, one third of the market value at the date of execution of the Deed of Settlement?

Answer

Yes. As Party A is not receiving capital proceeds for the disposal of his interest, they will be taken to have received the market value of their interest for its disposal. More information about capital proceeds can be found by searching for "QC17160".

Question 6

Is the first element of the coast base of the one third interests in Property 4, held by each of Parties B and C, one third of the purchase price paid collectively by Parties A, B and C for the purchase of Property 4?

Answer

Yes. The Commissioner considers that it is reasonable for one third of the purchase price to be apportioned to each party that acquired the property. More information about cost base can be found by searching for "QC17161".

Question 7

Does the second element of the cost base of the one third interests in Property 4, held by Parties B and C, one third of the stamp duty paid collectively by Parties A, B and C for the purchase of Property 4?

Answer

Yes. The Commissioner considers that it is reasonable for one third of the stamp duty to be apportioned to each party that acquired the property. More information about cost base can be found by searching for "QC17161".

Question 8

Are the capital proceeds received by each of Parties B and C for their disposal of a one third interest in Property 4 one third of the market value of Property 4 at the date of execution of the Deed of Settlement?

Answer

Yes. As Parties B and C are not receiving capital proceeds for the disposal of their individual interests, they will be taken to have received the market value of each interest for its disposal. More information about capital proceeds can be found by searching for "QC17160".

This ruling applies for the following periods:

Year ending 30 June 20XX

The scheme commences on:

1 December 20XX

Relevant facts and circumstances

Properties 1 and 2

Properties 1 and 2 were purchased by Party F during their lifetime.

Party F passed on a date before 19 September 1985. Party F's Will was granted probate.

Party F's Will provided that their Real Estate was to be held in trust by their Executors in equal shares for their issue until the time that the youngest child had attained 21 years of age.

Party G was appointed as the Executor of Party F's estate under their Will. Properties 1 and 2 were transferred to Party G as Executor.

Party G passed away. At this time, Properties 1 and 2 remained registered to Party G.

The interests in Properties 1 and 2 were transferred in equal shares to the Parties A, B, C and D as Administrators of Party F's estate on 20XX. The interests were then transferred in equal shares to Parties A, B C and D as beneficiaries of Party F on the same day.

A valuation was completed and issued.

Property 3

Parties A, B and C were registered as tenants in common with equal shares of Property 3. Parties A, B and C purchased Property 3 for an amount.

Property 3 was valued as being worth an amount.

Property 4

Parties A, B and C were registered as tenants in common with equal shares of Property 4. Parties A, B and C purchased Property 4 for an amount plus stamp duty.

Property 4 was valued as being worth an amount.

The Settlement Deed

A Deed of Settlement and Release (the Deed) was entered into. The parties to the Deed were:

·        Party A;

·        Party B;

·        Party C;

·        Party D; and

·        Company ABC

A condition precedent of the Deed was for the parties to attain from the Commissioner a private ruling in relation to the matters contained herein.

A sub-clause of the Deed provides that certain transfers of property are to take place.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 104-10

Income Tax Assessment Act 1997 section 108-5

Income Tax Assessment Act 1997 section 110-25

Income Tax Assessment Act 1997 section 112-20

Income Tax Assessment Act 1997 section 116-30

Income Tax Assessment Act 1997 section 128-15